NHA v.

EVANGELISTA 1st Option: Reconveyance of title An action for reconveyance is a legal and equitable remedy granted to the rightful owner of land, which has been wrongfully or erroneously registered in the name of another for the purpose of compelling the latter to transfer or reconvey the land to him. 1 Section 96 of PD 1529, which states: that nothing in this Decree shall be construed to deprive the plaintiff of any action which he may have against any persons for such loss or damage or deprivation constitutes sufficient statutory authority, under which the remedy of reconveyance may be invoked. In the case at bar, the action for reconveyance is the proper remedy to assail the title issued in favor of Evangelista because said title was wrongfully registered in the latters name. The Court has already rendered judgment nullifying the auction sale conducted by the Quezon City treasure and declaring the title issued in the name of Sarte, Evangelistas predecessor in interest, null and void. This declaration is a recognition of the superior right of NHA over the property. As a rightful owner of the land, NHA is entitled to recover the title to the disputed land. Furthermore, it should be noted that in the case of NHA v. Evanglista, the Supreme Court made a pronouncement that the issue of whether or not Evanglista is a purchaser in good faith must be threshed out in a full-blown trial for that purpose in an appropriate case and in the proper forum. It is submitted that the proper forum for such purpose is a direct proceeding to cancel the title through an action for reconveyance. The following cases support the action for reconveyance: Quiiano, et al. v. Court of Appeals: The controlling legal norm was set forth in succinct language by Justice Tuason in a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: The sole remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, as was done in the instant case, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages." Such a doctrine goes back to the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. If it were otherwise the institution of registration would, to quote from Justice Torres, serve "as a protecting mantle to cover and !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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shelter bad faith ...." In the language of the then Justice, later Chief Justice, Bengzon: "A different view would encourage fraud and permit one person unjustly to enrich himself at the expense of another." It would indeed be a signal failing of any legal system if under the circumstances disclosed, the aggrieved party is considered as having lost his right to a property to which he is entitled. It is one thing to protect an innocent third party; it is entirely a different matter, and one devoid of justification, if [deceit] would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed. As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against. So it has been before; so it should continue to be Naval v. Court of Appeals: The fact that petitioner was able to secure a title in her name did not operate to vest ownership upon her of the subject land. Registration of a piece of land under the Torrens System does not create or vest title, because it is not a mode of acquiring ownership. A certificate of title is merely an evidence of ownership or title over the particular property described therein. It cannot be used to protect a usurper from the true owner; nor can it be used as a shield for the commission of fraud; neither does it permit one to enrich himself at the expense of others. Its issuance in favor of a particular person does not foreclose the possibility that the real property may be co-owned with persons not named in the certificate, or that it may be held in trust for another person by the registered owner Walstrom v. Mapa, Jr: We have ruled before in Amerol vs. Bagumbaran that notwithstanding the irrevocability of the Torrens title already issued in the name of another person, he can still be compelled under the law to reconvey the subject property to the rightful owner. The property registered is deemed to be held in trust for the real owner by the person in whose name it is registered. After all, the Torrens system was not designed to shield and protect one who had committed fraud or misrepresentation and thus holds title in bad faith. On the issue of Prescription: It has been settled in this jurisdiction that an action for reconveyance may be barred by prescription. Jurisprudence has held that an action for reconveyance resulting from fraud prescribes within 4 years after the discovery of

fraud2 or within 10 years from the date of the issuance of the tile if the action is based on implied trust3. In the case at bar, however, it may be argued that the prescriptive period doesnt apply because the contract of sale to Evangelista is null and void. The sale to Evangelista conveyed no title for the simple reason that the vendor, Sarte, had no title or interest to transfer. Accordingly, it is an established principle that the Torrens system was not established as a means for the acquisition of title to private land. It is intended merely to confirm and register the title, which one may already have on the land. Where the applicant possesses no title or ownership over the parcel of land, he cannot acquire one under the Torrens system of registration.4 The argument that a void contract is imprescriptible is supported by Art 1410 of the Civil Code, which states: The action or defense for the declaration of the inexistence of a contract does not prescribe. Jurisprudence likewise enunciates the doctrine that actions for reconveyance based on a void contract is imprescriptible: Solid State Multu-Products Corporation v. Court of Appeals GR 83383, May 6,1991: In actions for reconveyance of property predicated on the fact that the conveyance complained of was void ab initio, a claim of prescription of the action would be unavailing (Corpus, et al. vs. Beltran, et al., 97 Phil. 722; Agne vs. Director of Lands, G.R. L-40399, February 6, 1990, 181 SCRA 793). Being null and void, the sale made to Mabini Legaspi and the subsequent titles issued pursuant thereto produced no legal effects whatsoever. Quod nullum est nullum producit affectum (Agnes vs. Director of Lands, supra). There being no title to the land that Mabini Legaspi acquired from the government, it follows that no title to the same land could be conveyed by the former to respondent Virata. Even assuming that respondent Virata was a purchaser in good faith and for value, the law is, as between two persons both of whom are in good faith and both innocent of any negligence, the law must protect and prefer the lawful holder of registered title over the transferee of a vendor bereft of any transmissible rights. Further if a person happened to obtain property by mistake or to the prejudice of another with or without bad faith, the certificate of title which may have been issued to him under the circumstances may and should be cancelled or corrected. Daclag v. Macahilig, GR no. 159578, February 18, 2009: !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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The deed of sale executed by Maxima in favor of petitioners was null and void, since Maxima was not the owner of the land she sold to petitioners, and the onehalf northern portion of such land was owned by respondents. Being an absolute nullity, the deed is subject to attack anytime, in accordance with Article 1410 of the Civil Code that an action to declare the inexistence of a void contract does not prescribe. Likewise, we have consistently ruled that when there is a showing of such illegality, the property registered is deemed to be simply held in trust for the real owner by the person in whose name it is registered, and the former then has the right to sue for the reconveyance of the property. An action for reconveyance based on a void contract is imprescriptible. Castillo, et al. v. Madrigal, et al., G.R. No. 62650, June 27, 1991: Both courts ruled incorrectly. It is evident in paragraphs 9, 10 and 12 of the complaint, supra, that petitioners sought the declaration of the inexistence of the deed of sale because of the absence of their consent. Thus, following the provision of Article 1410 of the Civil Code, this kind of action is imprescriptible. The action for reconveyance is likewise imprescriptible because its basis is the alleged void contract of sale.

2nd Option: Claim from Assurance Fund Another remedy granted to an owner of property but which property has been wrongfully or erroneously registered in another name is to file an action for recovery against the Assurance fund under Section 95 of PD no. 1529 to wit: Section 95. Action for compensation from funds. A person who, without negligence on his part, sustains loss or damage, or is deprived of land or any estate or interest therein in consequence of the bringing of the land under the operation of the Torrens system of arising after original registration of land, through fraud or in consequence of any error, omission, mistake or misdescription in any certificate of title or in any entry or memorandum in the registration book, and who by the provisions of this Decree is barred or otherwise precluded under the provision of any law from bringing an action for the recovery of such land or the estate or interest therein, may bring an action in any court of competent jurisdiction for the recovery of damages to be paid out of the Assurance Fund Section 95 provides a remedy where a person who sustains loss or damage or is deprived of any estate or interest in land in consequence of the

operations of the Torrens system of registration, without negligence on his part. The Assurance Fund is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land 5 Public policy demands that those unjustly deprived of their rights over real property by reason of the operation of our registration laws be afforded remedies. The case of Sps. Francisco v. National Treasurer provides for the requisites for recovery from the Assurance Fund while the case of Estrellado v. Martines enunciates the principle and rational of such remedy. The relevant portions of the decision are cited below: Sps. Francisco v. National Treasurer, G.R. No. 143281, August 3, 2000: It may be discerned from the foregoing provisions that the persons who may recover from the Assurance Fund are: 1) Any person who sustains loss or damage under the following conditions: a) that there was no negligence on his part; and b) that the loss or damage sustained was through any omission, mistake or malfeasance of the court personnel, or the Registrar of Deeds, his deputy, or other employees of the Registry in the performance of their respective duties under the provisions of the Land Registration Act, now, the Property Registration Decree; or 2) Any person who has been deprived of any land or interest therein under the following conditions: a) that there was no negligence on his part; b) that he was deprived as a consequence of the bringing of his land or interest therein under the provisions of the Property Registration Decree; or by the registration by any other person as owner of such land; or by mistake, omission or misdescription in any certificate of owners duplicate, or in any entry or memorandum in the register or other official book or by any cancellation; and c) that he is barred or in any way precluded from bringing an action for the recovery of such land or interest therein, or claim upon the same. Estrellado v. Martinez, G.R. No. L-23847, November 18, 1925: The authors of the Torrens system also wisely included provisions intended to safeguard the rights of prejudiced parties rightfully entitled to an interest in land but shut off from obtaining titles thereto. As suppletory to the registration of titles, pecuniary compensation by way of damages was provided for in certain cases for persons who had lost their property. For this purpose, an assurance fund was created. But the assurance fund was not intended to block any right which a person might have against another for the loss of his land. Damages were not to be recoverable from the assurance fund when they could be recovered from the person who caused the loss. !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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According to the scheme of the Torrens system, the indemnity fund is merely ancillary to the system of registering and transferring titles to real estate. It is intended to relieve innocent persons from the harshness of the doctrine that a certificate is conclusive evidence of an indefeasible title to land, and from any injustice which may arise to them by operations under the act, making for the conclusiveness of a certificate, whether such injustice arises from the fraud or error of some one connected with the registry office, or of some third person dealing with the land. It is not intended to relieve from the legal consequences of his act any third person who perpetrates a fraud or commits an error, and it is not intended to relieve a person, who is injured by operations under the system, from the burden of prosecuting the remedies given to him by the general laws or by the act establishing the system . . . . The maxim equity, is "Equity will not suffer a wrong to be without a remedy. The civil law makes it the duty of the courts to protect the owner of property who may be deprived of it (Civil Code, art. 349). No one should be permitted to enrich himself at the expense of another. As the title to the land may not be assailed, the only possible way to rectify the situation is by giving compensation to the claimant to be paid by the holder of the property.

3rd Option: File a case for damages NHA may file its claim for damages jointly with the action for reconveyance or may institute independently an action for damages against the person responsible for depriving NHAs right or interest over the property. As held in the case of Gonzales v. IAC, the action for damages is an available remedy even if the property has passed into the hands of an innocent purchaser for value,6 The cases cited below discusses action for damages as an equitable remedy provided for by law to vindicate rights of property owners who were unlawfully deprived of their title over the properties: Quiniano v. CA, G.R. No. L-2302, May 31, 1971 The controlling legal norm was set forth in succinct language by Justice Tuason in a 1953 decision, Director of Lands v. Register of Deeds of Rizal. Thus: "The sole remedy of the land owner whose property has been wrongfully or erroneously registered in another's name is, after one year from the date of the decree, not to set aside the decree, as was done in the instant case, but, respecting the decree as incontrovertible and no longer open to review, to bring !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
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an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages." Such a doctrine goes back to the 1919 landmark decision of Cabanos v. Register of Deeds of Laguna. If it were otherwise the institution of registration would, to quote from Justice Torres, serve "as a protecting mantle to cover and shelter bad faith ...." In the language of the then Justice, later Chief Justice, Bengzon,: "A different view would encourage fraud and permit one person unjustly to enrich himself at the expense of another." It would indeed be a signal failing of any legal system if under the circumstances disclosed, the aggrieved party is considered as having lost his right to a property to which he is entitled. It is one thing to protect an innocent third party; it is entirely a different matter, and one devoid of justification, if deceit would be rewarded by allowing the perpetrator to enjoy the fruits of his nefarious deed. As clearly revealed by the undeviating line of decisions coming from this Court, such an undesirable eventuality is precisely sought to be guarded against. So it has been before; so it should continue to be. Sumira, et al. vs. Vistan, G.R. No. L-48635 February 26, 1943 As to the action for damages, actual fraud need not be pleaded and proved, constructive fraud being sufficient. Constructive fraud as distinguished from actual fraud does not mean downright dishonesty of some sort, but an unintentional deception, negligence, mistake of fact or any transaction, which equity regards as wrongful and to which it attributes the same or similar effects as those which follow from actual fraud. Here, defendant Vistan may have acted without malice in procuring exclusive Torrens title in her name, but as in truth she is not the owner of the whole land and plaintiffs have been deprived of their rights with no fault of their own, an equitable remedy for damages may be granted them even if the property has already been conveyed to an innocent third person. The reason for the rule is that nobody should be allowed to enrich himself at the expense of another. !